Bombay HC Raps Suspended Directors Over Obstruction In Insolvency Process, Orders Juhu Property Handover

Mumbai, May 23: Coming down heavily on the suspended directors of a corporate debtor for allegedly obstructing the insolvency resolution process, the Bombay High Court has directed authorities to hand over possession of the entire property situated at 37, Juhu Beach, Mumbai, to the successful resolution applicant (SRA) with police protection.

A bench of Justices Manish Pitale and Shreeram Shirsat also authorised the police to use “reasonable, appropriate and necessary force” to ensure compliance with its orders and warned that anyone obstructing the process would be dealt with appropriately.

Court directs police assistance

The case arose from a plea filed by interim manager and erstwhile resolution professional Pravin Navandar, seeking assistance in taking physical possession of the assets of the corporate debtor in terms of orders passed by the National Company Law Tribunal (NCLT).

Earlier, on April 28, the HC had directed the Juhu Police Station to provide police assistance for handing over possession. However, the petitioner informed the court that the order could only be partly implemented because of obstruction allegedly caused by the suspended directors and their security personnel.

During the hearing, one of the suspended directors argued that only certain CTS numbers mentioned in the information memorandum formed part of the corporate debtor’s assets and that other adjoining plots could not be taken over.

HC rejects directors’ contention

Rejecting the contention, the bench observed that the directors were taking “a diametrically opposite stand” compared to earlier proceedings before the NCLAT and the Supreme Court, where they had themselves claimed that the disputed CTS No. 561 formed part of the corporate debtor’s property.

“We find that the aforesaid approach of the applicant and the other suspended directors of the corporate debtor was taken note of by the NCLT,” the court said, referring to earlier findings on their lack of cooperation during the Corporate Insolvency Resolution Process (CIRP).

The HC further remarked that the directors had “continued with their obstructionist activities” and were attempting to “frustrate the orders passed by the NCLT and this Court”.

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The bench noted that the conduct of the suspended directors defeated “the very object” of the Insolvency and Bankruptcy Code (IBC). It also relied on an earlier NCLT observation that the directors were “more concerned with loss of control of the Corporate Debtor” than supporting the resolution process.

The court directed the Juhu Police to deploy adequate personnel, including lady constables, during the possession exercise and warned that anyone obstructing the process would be dealt with appropriately.

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